Use the Table for the Question(s)below

question 29

Multiple Choice

Use the table for the question(s) below.
-Banco Industries expect sales to grow at a rapid rate over the next 3 years,but settle to an industry growth rate of 5% in year 4.The spreadsheet above shows a simplified pro forma for Banco Industries.Banco industries has a weighted average cost of capital of 12%,$50 million in cash,$60 million in debt,and 18 million shares outstanding.If Banco Industries can reduce their operating expenses so that EBIT becomes 12% of sales,by how much will their stock price increase?

• A)$2.81
• B)$3.36
• C)$4.98
• D)$8.89

Calculate the direct comparison between past and current values to determine financial changes.

Apply the concept of unit price changes to real-world problems.

Interpret financial data to determine changes in market conditions or business strategies.

Calculate tax implications on purchases and understand tax rates.

---

Definitions:

Design Phase

A stage in product development where the specifications and features of a product are planned and detailed.

Manufacturing Cycle

The complete series of steps involved in producing a product, from raw material procurement to the final good.

Distributor/Manufacturer Interface

The point of interaction between distributors and manufacturers, dealing with the exchange of goods, information, and payments.

Outsourcing Decision

The process by which a company decides whether to allocate specific operational tasks or processes to external vendors rather than completing them internally.